It has been about a month since the last earnings report for Iron Mountain (IRM Quick QuoteIRM - Free Report) . Shares have added about 6.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Iron Mountain due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Iron Mountain Beats on Q4 FFO, Eyes Expansion in India

Iron Mountain reported fourth-quarter 2020 adjusted FFO (AFFO) per share of 66 cents, which surpassed the Zacks Consensus Estimate of 60 cents. However, the reported figure was 18% lower than the year-ago quarter’s 81 cents.

Revenues of $1.06 billion too declined 2.2% year over year.  Nonetheless, the top line outpaced the Zacks Consensus Estimate of $1.04 billion.

Continued resilience in the company’s core storage business aided results. However, the service segment‘s performance was disappointing.

For 2020, the company reported AFFO per share of $3.07, up 2% from the prior year’s $3.01. Also, the figure beat the Zacks Consensus Estimate of $2.30. However, total revenues of $4.14 billion decreased 2.7% year over year.

Concurrent with its earnings release, Iron Mountain announced that it entered into a joint venture agreement with Web Werks, one of India’s top colocation data-center providers. With anticipated investments of $150 million over the next two years, this agreement expands the company’s data-center footprint to India.

Quarter in Detail

Storage revenues were $697 million in the December-end quarter, highlighting a 2.9% year-over-year increase on a constant-currency basis. The company recorded 1.7% organic growth year over year.

Service revenues amounted to $362 million in the reported quarter, indicating a year-over-year fall of 10.8% on a constant-currency basis. Further, organic service revenues declined 12.1% year over year.

Adjusted EBITDA margin shrunk 110 basis points (bps) to 35.3%.

The company exited the fourth quarter with $205.1 million of cash and cash equivalents, up from $193.6 million at 2019 end.

Project Summit Update

Iron Mountain’s transformation program Project Summit focuses on simplifying its global structure, streamlining managerial structure and enhancing its customer experience.

Project Summit generated adjusted EBITDA benefits of $165 million in 2020 and is anticipated to deliver annual adjusted EBITDA benefits of $375 million exiting 2021. The total cost to implement the program is estimated to be approximately $450 million.

Outlook

Iron Mountain provided an initial guidance for 2021 and expects the current-year AFFO per share of $3.25-$3.42.

Revenues are projected at $4,325-$4,475 million and adjusted EBITDA is predicted to be $1,575-$1,625 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 5.46% due to these changes.

VGM Scores

Currently, Iron Mountain has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Iron Mountain has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.